Private equity (PE) funds continued to remain upbeat in the second quarter of 2017 despite a slight decline in activity as compared to the first quarter. This quarter witnessed PE investments worth 6.3 billion USD across 155 deals, a 13% decline in deal value as compared to the previous quarter. However, there was a 51% increase in deal value as compared to the same period last year.
Despite a decline in terms of volume as compared to the second quarter of 2016, PE funds demonstrated renewed confidence in the Technology space with investments worth 2.7 billion USD, a 93% increase over the same period last year. This sector accounted for over 40% of the total investment value this quarter, having recorded the largest deal of the quarter at 1.4 billion USD.
This quarter also witnessed significant exit activity, recording 61 exits worth 2.8 billion USD—that is, double the exit value for the same period last year. Exits in the Technology space increased more than six-fold over the second quarter of 2016, amounting to 0.7 billion USD.
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Total private equity investments -- Q2 2017
Investments by industry -- Q2 2017
Despite the slowdown in growth in the Indian technology sector and in the midst of layoffs and US visa issues, technology continued to be a major investment theme in the second quarter, with IT & ITeS accounting for a large share of overall deal value despite growth in volumes remaining flat. This quarter witnessed significant developments around further consolidation in the e-tail segment, along with several new billion-dollar funds flowing into the technology sector. As transactions continue to move online, new areas such as FinTech and the hyperlocal and travel segments are set to benefit in the long term. As e-Commerce players strive to achieve profitability, the year could also see companies opting for an initial public offering (IPO) as a preferred exit route.
Global TMT Tax Leader and India Technology Leader
As per the fourth edition of the FICCI-PwC Strategy& India Manufacturing Barometer report, the Indian manufacturing industry is looking to focus on new products/services, R&D, IT and expanding its facilities in select sectors. Companies in the manufacturing space have shown resilience in the face of challenges and are confident about the sector’s growth prospects. While the number of PE deals in the manufacturing sector is limited compared to that in other sectors, we note that quite a few manufacturing companies which are debt-laden are open to exploring the PE route to strengthen their balance sheet and further expand their business operations.
Partner and Leader, Industrial Products